Kotak NPS Calculator

Let us understand more about the National Pension Scheme from an Indian citizen’s point of view focusing on the NPS Calculator, features, benefits, etc. offered by Kotak Bank.

What is Kotak NPS?

National Pension Scheme is a beneficial scheme for all the citizens of India, irrespective of the financial category, to safeguard their future monetarily even after the age of retirement. Any individual between the age of 18 years to 60 years can opt for a National Pension Scheme account in any bank or financial institution offering the scheme. In the age of digitalization, an eNPS account can also be opened if an individual has an Aadhar Card or a PAN Card.

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What is Kotak NPS Calculator?

Kotak NPS Calculator is an easy-to-use and hassle-free online financial tool that helps in the computation of a lump sum amount an NPS account holder is liable to receive at the age of retirement according to the contributions made throughout the policy tenure. One of the major advantages of the NPS Calculator is that the depositor can keep a check as to how much they need to deposit in order to meet their retirement goals, helping them plan and save accordingly.

By entering a few basic details mentioned below, the account holder can easily compute the lump sum amount receivable at the end of the policy tenure.

• The present age of the Kotak National Pension Scheme account holder

• Type of investment the depositor is willing to make (can be monthly deposits or yearly, depending upon the finances)

• Amount willing to be invested in the NPS scheme

• Choice of NPS (Auto choice or Active choice)

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Kotak NPS Calculator Formula

NPS Calculator has an easy formula used while the computation of the lump sum amount that an investor is expected to receive at the age of retirement. Enter a few basic details related to the scheme and get lump sum results in no time. The following formula is used in the Kotak NPS Calculator for computation of interest:

FV = P (1 + r/n) ^ nt

Here,

FV = Final Value

P = Principal Sum

r = Rate of interest per annum

n = Total number of times the interest compounds

t = Tenure

For example,

Mr. Ram is a 34 years old man investing in Kotak NPS Account monthly Rs. 3,000 without fail. Assuming a hypothetical Rate of Interest (ROI) of 10% annually, Mr. Ram needs to add the pension amount for his remaining 26 years before retirement. As per the NPS formula,

• The total principal amount invested till the age of retirement will be around Rs. 9.36 lakh (approximately)

• The total sum to be received at the time of maturity will be around Rs. 44.35 lakh (approximately)

Why Kotak Bank for NPS?

One of the leading Indian banking and financial services companies, Kotak has been offering a plethora of banking products and financial services to their retail and corporate customers for many years now. Some of the highlighted features that Kotak NPS offers are:

• Low cost of investment

• Completely under the regulation of PFRDA (Pension Fund Regulatory and Development Authority)

• Kotak NPS policy can be easily switched across a job or geographical changes of the policyholder

• Easy switching between the choice of funds (Auto or Active), fund managers, and investment options is available

• The tax benefit is offered under Tier-I contributions

• Quick accessibility of the Kotak NPS account is provided

• A PRAN card is issued at the time of policy purchase

• TDS is not deducted from the withdrawal amount

How to Subscribe to Kotak NPS?

Subscription of the Kotak National Pension Scheme account can be done either through an online or offline mode of subscription. Offline mode can be taken by visiting the nearest Kotak Bank branch and submitting the required documents asked by the branch manager.

Online mode of subscription can be done with just a few clicks through your smartphone or laptop which can be considered an easy and time saving process. To apply to the Kotak NPS via online mode, all you have to do is:

• Visit the official website of Kotak Bank

• Subscribe to the account by creating your credentials

• Enter all the important details like

• Personal details

• Nominee details

• Select the scheme preference

• Enter the amount you are willing to contribute

• Provide the KYC documents as per the PFRDA norms

• ID Proof

• PAN Card

• Aadhar Card

• Voter ID Card

• Passport

• Bank passbook

• Passport size photographs, etc.

• Address proof

• Voter ID Card

• Aadhar Card

• Bank statement

• Driver’s license

• Electricity bill, etc

• Upload the required documents and eSign the forms

• Your Kotak NPS account is now activated

• To initiate the Kotak NPS account

• Payment to be made for Tier-I account: Rs. 500

• Payment to be made for both Tier-I and Tier-II accounts: Rs. 1500

• The cheque needs to be in favor of “Kotak Mahindra Bank Collection Account - NPS Trust”

• To open Tier-II account: canceled cheque is mandatory

• Aadhan and PAN Card are mandatory

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Eligibility Criteria for Kotak National Pension Scheme

Following is the basic eligibility criteria that are applicable for all the banks and financial institutions offering the NPS account to their customers:

• Citizens of India residing in India can open an NPS account

• The minimum age criteria for opening a National Pension Scheme account is 18 years

• The maximum age criteria for opening a National Pension Scheme account is 65 years

• KYC Compliance is compulsory before applying for an NPS account 

• The applicant is not allowed to own more than 1 NPS account

Benefits of Kotak National Pension Scheme Account

With guaranteed returns and complete safety and transparency, NPS comes out to be extremely fruitful for all the citizens of India. Here are some of the top benefits offered under the National Pension Scheme:

1. Liquidity

   Liquidity is provided through the following accounts offered under the NPS. Also a unique (PRAN) Permanent Retirement Account Number is compulsory while attaining the liquidity benefits.

   1. Tier-I Account

      • This account works as a pension account

      • Withdrawn can be made but are subject to specific restrictions

      • A minimum deposit of 500 rupees is required for opening this account

   2. Tier-II Account

      • This account works as a voluntary account

      • Liquidity is provided through withdrawals and investments

      • A minimum deposit of 250 rupees is required for opening this account

      • To open a Tier-II account Tier-I account needs to be active

2. Flexibility

   NPS offers flexibility in terms of choices:

   1. Auto Choice

      • A default option if investors are confused between choices

      • Allocation of assets is directly related to the age of the investor

      • As it is auto choice, the proportion cannot be decided by the investor

   2. Active Choice

      • Assets can be allocated between

        • Equity

        • Corporate Bonds

        • Government Securities

      • Allocation can be made in different classes as per the investor’s will 

      • Under the equity choice, a maximum of 75% can be allocated

      • Investors can switch between investment options and fund managers as and when required

3. Tax Benefit

   Income Tax Act 1961	Tax Benefits
   U/S 80CCD (1)	1.5 lakh of tax is deductible within the total ceiling Under Tier-I investment
   U/S 80CCD 1(B)	Up to Rs.50,000 is allowed as deductions towards Tier-I investment
   U/S 80CCD (2)	For Tier-I investment, deductions up to 14% for central government and 10% for the rest are eligible

In The End!

Intending to create a decent financial corpus for every citizen of India after retirement, National Pension Scheme is for all who believe in a safe and secure financial future. 

Kotak NPS Calculator helps in knowing the contributions made under the scheme to date and planning your new investment accordingly so that the investor has a corpus as per their future needs. It is important to keep all the future aspects in mind before making any kind of investment.